Roi calculations for notes.

[Andrew O.]

I am missing an understanding or a step in the simple calculation of finding how much ROI I get for my cash with regards to notes.

This is my simple process, which seems to give me whack return figures.

Monthly payment x remaining payments = Total return

Total return/Cost of the note = total interest earned.

Total interest earned / # of payments remaining x 12 = interest earned per year.

If I divide the interest earned per year by the cost of the note (principle) I should get the interest earned on my money each year, right?

I generally have a good grasp of mathematics, I enjoy it, what I am doing wrong in the above has me confused though, for a 12% note I am calculating a yearly return of around 8.5%, which just doesn't make sense.

My math or my undestanding of a concept is off. Please correct this.

Andrew